Sustainable Development Finance Policy of the International Development Association - FY25 Implementation Update and Policy Enhancements - Policy briefing

Jul 19, 2026

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Sustainable Development Finance Policy of the International Development Association presents the FY25 implementation update and targeted policy enhancements under Development Finance, Corporate IDA & IBRD (DFCII). The document defines relevant fiscal and monetary context, expands acronym guidance, and outlines the approach through four core components: the Debt Sustainability Enhancement Program, FY24-to-FY25 policy action preparation, the Program of Creditor Outreach, and cross-MDB policy implications. Annexes provide global debt development evidence and detailed implementation information for the new incentive mechanism.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages35

Reading Time1 h 28 min

Executive Summary

Introduction

Debt Sustainability Enhancement Program

FY24 Implementation and FY25 Formulation of PPAs

Strengthening the SDFP

Review of FY24 Policy Enhancements

Transitioning from a Negative Set-Aside to a Positive Incentive

Program of Creditor Outreach

Conclusion

List of Annexes

Global Debt Development

Implementation of DSEP

Additional Details on the New Incentive Mechanism

Sustainable Development Finance Policies Across MDBs

Table of Figures, Boxes, and Tables

Public Disclosure Authorized Public Disclosure Authorized SUSTAINABLE DEVELOPMENT FINANCE POLICY OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION: FY25 IMPLEMENTATION UPDATE AND POLICY ENHANCEMENTS Development Finance, Corporate IDA & IBRD (DFCII) ACRONYMS AND ABBREVIATIONS Fiscal Year (FY) = July 1 to June 30 All dollar amounts are US dollars AfDB AIIB AsDB CRDC DPF DSA DSEP FCV GDP GSDR IAN IDA IDA21 IFAD IMF LIC LIC DSF MAC African Development Bank Asian Infrastructure Investment Bank Asian Development Bank Climate-Resilient Debt Clause Development Policy Financing Debt Sustainability Analysis Debt Sustainability Enhancement Program Fragility, Conflict, and Violence Gross domestic product Global Sovereign Debt Roundtable Implementation Assessment Note International Development Association 21st Replenishment of IDA International Fund for Agricultural Development International Monetary Fund Low-income country Debt Sustainability Framework for Low-Income Countries Sovereign Risk and Debt SRDSF MDB MCDF NCB OECD OP 7.30 PBA PCO PPA PPG RECA SACU SDFP SOE SIEE SEE VAT Sustainability Framework for Market Access Countries Multilateral development bank Multilateral Cooperation Center for Development Finance Non-concessional borrowing Organisation for Economic Cooperation and Development Operation Policy 7.30 Performance-Based Allocations Program of Creditor Outreach Performance and Policy Action Public and publicly guaranteed Remaining Engaged in Conflict Allocation Southern African Customs Union Sustainable Development Finance Policy State-owned enterprises Small Island Economies Exception Small States Exception Value-added tax TABLE OF CONTENTS EXECUTIVE SUMMARY ........................................................................................................... i I. INTRODUCTION................................................................................................................... 1 II. DEBT SUSTAINABILITY ENHANCEMENT PROGRAM ............................................. 2 A. FY24 Implementation and FY25 Formulation of PPAs ..................................................... 2 B. Strengthening the SDFP...................................................................................................... 7 i. Review of FY24 Policy Enhancements ..................................................................... 7 ii. Transitioning from a Negative Set-Aside to a Positive Incentive.............................. 9 III.PROGRAM OF CREDITOR OUTREACH ...................................................................... 11 IV. CONCLUSION ..................................................................................................................... 15 LIST OF ANNEXES Annex 1. Global Debt Development............................................................................................. 17 Annex 2. Implementation of DSEP .............................................................................................. 21 Annex 3. Additional Details on the New Incentive Mechanism .................................................. 28 Annex 4. Sustainable Development Finance Policies Across MDBs........................................... 29 TABLE OF FIGURES, BOXES, AND TABLES FIGURES Figure 2. 1. Evolution of the PPAs Approved in FY21 – FY25 ..................................................... 3 Figure A1 . 1. Public Debt Trends in IDA Countries: Median Public Debt-to-GDP Ratio by Country Groups ................................................................................................. 17 Figure A1 . 2. Public Debt Trends in IDA Countries: Median Public Debt-to-GDP Ratio by Region ............................................................................................................... 17 Figure A1 . 3. Evolution of LIC DSA Debt Risk for IDA Countries: Ex

FAQs

What is the purpose of the FY25 Sustainable Development Finance Policy update?

It provides an FY25 implementation update and policy enhancements for the International Development Association, focused on debt sustainability and related program actions.

How does the Debt Sustainability Enhancement Program connect to FY24 and FY25?

It covers FY24 implementation and the formulation of FY25 Performance and Policy Action (PPA) elements, including strengthening the Sustainable Development Finance Policy.

What changes are described in strengthening the SDFP incentive structure?

The document explains a transition from a negative set-aside approach to a positive incentive mechanism within the FY25 formulation work.

Jul 19, 2026

Upload by Aria